Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
Employment increased more than expected in September and the unemployment rate eased slightly. However, the pace of job gains over the past three months remains weak. Moreover, the details show that the lower unemployment rate is partly the result of little change in the labour force, despite strong population growth, as workers stay on the sidelines, pushing the participation rate to 64.9%, its lowest since March 1998 if we exclude the pandemic. Similarly, the employment rate eased to 60.7%, its lowest since September 1999, if we exclude the pandemic.
The better-than-expected job gains and the lower unemployment rate suggest some modest improvement in the labour market. While the robust increase in hours worked was likely the result of the rise in full-time employment, it indicates better economic activity in September.
Wage growth for permanent workers eased to 4.5%, lower than expectations. Moreover, we estimate that the 3-month annualized change of the seasonally-adjusted series was 3.3%, suggesting more subdued wage increases in recent months, something that will be welcomed by the BoC. Nevertheless, some provinces, namely Manitoba, Alberta and BC, saw wage growth below or barely above inflation, indicating no improvement in purchasing power over the past year.
Overall, the report shows a rebound in the labour market in September. However, one good month doesn’t make a trend, with job gains averaging 22k over the past 3-months. As such, there continued to be signs of weakness, with the participation and employment rates reaching their lowest levels since the late 1990s. Moreover, the unemployment rate remains elevated. We do not believe today’s report will meaningfully change the BoC’s view of the economy and continue to think a 50bp cut remains appropriate at the October meeting to accelerate the normalization of monetary policy. However, the better-than-expected job report somewhat reduces the likelihood of this scenario in favour of a smaller 25bp cut.
Alberta saw a decline in employment in September of 7.6k. Despite lower employment, a decrease in the participation rate pushed the unemployment rate lower to 7.5%. We also note that, with job growth being significantly lower than population growth over the past years, the employment rate is now at its lowest level on record at 63.6%, if we exclude the pandemic.
Over the past year, the province has created 73k jobs, and the momentum has been very weak in recent months. Moreover, the unemployment rate in Alberta remains higher than the national measure, in part due to the strong population growth. Wage growth in Alberta eased to +2.3% y-o-y, underperformed the rest of the country (see Where’s the boom? And the rise and fall of the Alberta Advantage for some explanations), and was only marginally above inflation, suggesting barely any gains in purchasing power over the past year.
Employment increased by 46.7k in September, stronger than expectations. With the better-than-expected gain in employment, the unemployment rate eased to 6.5% from 6.6%. However, it is important to note that part of the decline in the unemployment rate was due to no increase in the labour force despite strong population growth. As such, the participation rate edged lower to 64.9% from 65.1%, its lowest since March 1998 if we exclude the pandemic. The employment rate, the share of the population holding a job, eased to 60.7% from 60.8%, its lowest since September 1999, as the population grew faster than employment.
Wage growth for permanent workers decelerated to 4.5% from 4.9% y-o-y and came in weaker than expectations. The 3-month annualized change in seasonally-adjusted wages decelerated to 3.3%, suggesting weaker wage pressures in recent months are leading to the deceleration in wages. Moreover, wage growth also eased across a broad spectrum of measures.
The details show that sizeable job gains in full-time (+112.0k) were partly offset by big losses in part-time jobs (-65.3k). This explains somewhat the increase in hours worked (+0.4% m-o-m), but also suggests that economic activity was likely robust in September. The higher employment in September was mostly in the private sector (+38.2k), while there were losses in the public sector (-23.6k) and small gains in self-employed (+8.9k). Over the past year, about 40% of job creation was in the public sector.
On an industrial level, the employment gains were mostly in the service sector (+50.2k), while jobs in the goods-producing sector declined slightly (–3.6k).
The details in the good-producing sector show that the job losses were mainly in agriculture (-4.7k), manufacturing (-4.6k) and natural resources (-3.7k). Job gains in construction (+7.9k) and utilities (+1.6k) offset some of the decline.
The increase in the service industries was led by trade (+21.9k), information, culture, and recreation (+21.9k), and professional, technical and scientific (+20.6k). These gains were partly offset by losses in education (-11.6k), and health care (-9.2k). Despite the gains in August and September, retail and wholesale trade employment has declined by 85k over the past 12 months, suggesting some weakness in this sector.
At a provincial level, employment was mixed. Most of the gains in employment were in Ontario (+43.2k, +0.5% m-o-m), Quebec (+21.7k, +0.5% m-o-m), and Manitoba (+5.1k, +0.7% m-o-m). These gains were partly offset by losses in BC (-18.0k, -0.6% m-o-m), Alberta (-7.6k, -0.3% m-o-m), and New Brunswick (-4.1k, -1.0% m-o-m).
The unemployment rate was mostly lower across provinces but increased in Saskatchewan (+0.3pp), BC (+0.2pp), and New Brunswick (+0.2pp). It eased the most in PEI (-1.1pp), Newfoundland (-0.4pp), and Nova Scotia (-0.4pp).
The unemployment rate is the highest in Newfoundland (+10.0%), Alberta (7.5%), PEI (7.1%), Ontario (6.9%), and New Brunswick (6.7%). It is the lowest in Quebec (5.5%), Saskatchewan (5.7%), Manitoba (5.7%), and BC (6.0%).
Wages for permanent workers increased the most in PEI (9.8% y-o-y), Nova Scotia (+6.6% y-o-y), New Brunswick (+5.9% y-o-y), and Ontario (+5.6% y-o-y). It rose at the slowest pace in Manitoba (+1.4% y-o-y), BC (+2.1% y-o-y), Alberta (+2.3% y-o-y), and Saskatchewan (+2.8% y-o-y). The weak wage growth in Manitoba, Alberta and BC suggests no gains in purchasing power in these provinces.
In Alberta, employment decreased by 7.6k, while the unemployment rate eased to 7.5%. The lower unemployment rate, despite job losses, was mainly the result of a big decline in the labour force, with the participation rate falling to 68.8% from 69.4%. The employment rate, the share of the population holding a job, also dropped to 63.6%, which is the lowest on record if we exclude the pandemic. Wage growth for permanent workers slowed to 2.3% y-o-y, and outperforming the rest of the country. Moreover, with inflation in the province around 2%, it suggests almost no improvement in purchasing power over the past year.
The job losses in Alberta were mainly part-time (-10.8k), while full-time saw a small gain (+3.3k). The lower employment was mostly in the public sector (-8.0k), while there were some marginal losses in the private sector (-0.4k) and gains in self-employed (+1.0k).
The employment losses were mainly in the service sector (-7.0k), while the goods-producing saw a marginal decline (-0.5k).
The decrease in the goods-producing industry was mainly in manufacturing (-2.6k), construction (-2.5k), and utilities (-1.3k), while the natural resources sector increased (+6.2k).
The service sector saw losses in education (-18.1k), information culture and recreation (-10.3k), and accommodation and food services (-3.7k). These declines were partly offset by gains in health care (+10.3k), professional, technical and scientific (+7.1k), and trade (+4.8k).
On a regional basis[1], the data is published on a three-month average basis (see table below). Over the past three months, the province gained 1.4k jobs each month on average. The increases were mainly in Edmonton (+3.2k), Camrose-Drumheller (+2.6k), and Red Deer (+1.9k), while there were losses in Lethbridge-Medicine Hat (-4.4k), Calgary (-2.9k), and Western Alberta (-1.8k).
The unemployment rate for the province rose to 7.4% on average over the past three months. The unemployment rate edged higher in most regions, led by Lethbridge-Medicine Hat (+0.7pp), Western Alberta (+0.3pp), Edmonton (+0.2pp), and Wood Buffalo-Cold Lake (+0.2pp). The unemployment rate eased in Calgary (-0.2pp) and Red Deer (-0.2pp).
The unemployment rate is the highest in Edmonton (+8.6%), Red Deer (+7.6%), and Calgary (+7.2%). It is the lowest in Camrose-Drumheller (4.7%), Western Alberta (5.1%), and Lethbridge-Medicine Hat (6.1%).
The employment rate for Alberta eased to a level of 64.0% over the past three months as employment grows more slowly than population. The employment rate deteriorated the most in Lethbridge-Medicine Hat (-2.0pp), Western Alberta (-0.8pp), and Calgary (-0.4pp). It improved in Camrose-Drumheller (+1.5pp) and Red Deer (+0.8pp).
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Independent Opinion
The views and opinions expressed in this publication are solely and independently those of the author and do not necessarily reflect the views and opinions of any organization or person in any way affiliated with the author including, without limitation, any current or past employers of the author. While reasonable effort was taken to ensure the information and analysis in this publication is accurate, it has been prepared solely for general informational purposes. There are no warranties or representations being provided with respect to the accuracy and completeness of the content in this publication. Nothing in this publication should be construed as providing professional advice on the matters discussed. The author does not assume any liability arising from any form of reliance on this publication.